friday for the first time since 2007. for the month the dow industrials were up 6%. the s&p 500, 5%. and the nasdaq was up 4%. >> i think there's a lot of positive in the market right now. is it going to go straight up? no. is it going to blow up? i don't think so. is february and march going to be choppy because of sequestration? yes. but i think we're higher from here by the end of the year. meanwhile, u.s. economic growth was nonexistent in the last quarter of 2012. in fact, the gross domestic product contracted by an unexpected 20%. defense spending and business inventories were down. consumer spending was up. an encouraging sign. big internet signings, facebook beat effect tagss, as diddia hoop. sam am so fell short. boeing pass eed estimates and sd the top priority is to fix the battery problem on the 787

dreamliner. despite big corporate earnings, big investors are worried about what washington may do. >> i think the hardest thing today is being in a section of politics and business don't work. it's very hard for businesspeople to say what politicians are going to do. they do think for noneconomic reasons. meanwhile, blackberry is hoping the new phone and operating system will be the perfect ten. unveiling the new product line. the blackberry 10, it comes with 70,000 apps and it's designed so you only have to carry one phone for both personal and corporate use. >> there's a music store, movie store. that indicates the audience is regular people, an yet there's this blackberry balance feature that let's the company put their apps and wallpaper in a segregated sand box. and you can't see that stuff without the pass word. so, in other words, you can have your personal stuff and your corporate stuff side by side. >> just part of the conversation

taking place this week in the news. it has been an extraordinary week with the markets having an astounding month and enough economic data to choke a horse. we have two of the smartest guys in the room right now. roger is with me, former deputy we treasury secretary under bill clinton and chairman of ever corp. partners. and from a vice chairman of the federal reserve he is also the author of "after the music stopped, the financial crisis, the response and the work ahead." gentlemen, it's good to have you on the program. >> good to be here. >> so much to discuss. allen, this week we have the unemployment report in the month of january, in line with expectations. unemployment rate ticking up to 7.9% and the disappointing gdp report. what does that tell you? >> i think if you -- what you need to do is average through the third quarter, which was higher than it should have been. and the fourth quarter, which is lower than it should have been. why do i say that? we have this big mysterious bounce up in defense spending.

government spending in general, seems mysterious in the third quarter. then it disappears in the 40 quarter. if you average those two, ditto with inventory. acouple lakes and decumulation. if you average those two, it looks like it's been looking like a sort of a 2% minus growth trajectory, which is, you know, fa from zero but not very good. >> what do you think? >> i agree with alan. i think we are growing at around 2% and the fourth quarter will turn out to have been an outliar with a minus 0.1%. i personally think as the year goes on, 2013, and we get towards the end, you're going to begin to pass out of this four to five-year period where the dominant force was the head winds triggered by 2008 and we're going to move into a somewhat better period of growth. i think once we turn the corner that way, the risks may be on the upside. >> okay. meanwhile, throughout all of this and this uncertainty, the markets have been on a tear. so much money moving into

equitys and you're seeing even the small investor begin to return to the market. so does this jive in your mind in terms of what's behind all the vibrancy? >> i think it does jive because of the point of transitioning to a stronger economy, number one. but number two, ceos are optimistic now. i think you're seeing that indirectly in the way the equity markets are perform sfwlg the federal reserve, not a lot of alternatives. people looking for yields, looking for returns. where are you going to get it? >> that was one of the stated objectives in the federal reserve. you can find that in bernanke's speeches. we want to beat the rate on treasuries down to nothing so people have to go out and buy something else other than treasuries. >> that's what they've done. let's talk about the debt because this is obviously front and center, as well. i want to get your take on what

we hear from mcginnis, from the fix the debt committee. i'm worried that they're talking in ways that entrench on both sides instead of thinking about how do we focus on what needs to get done and we haven't done yet? performing entitlements and the tax code, and putting in place a deal that's big enough, bigger than the sequester, to actually put the debt on a downward path. now, roger, i know you say we are already on that path toward getting our arms around this. but it just seems that we all know the main drivers of the debt, $16.4 trillion in debt, this country faces. health care costs, medicaid, medicare, social security. there aren't any real plans on the table to slow down spending. >> i think the mixed picture is as follows. yes, i think more deficit reduction is occurring than most people realize. if the sequester actually occurs or cuts equivalent to the size of the sequester occur, $1.2 trillion over two years, you will have had $3 trillion of

deficit reduction done or in the pipelines, and simpson bowles two years ago called for 4.5%. you will have done two thirds of what they said. although if they were sitting here today they would probably call for a higher number. however, it's not being done in the right way. on a balanced way and adequately balanced between revenues and spending and the key to spending restraint over the very long term, entitlement reform is not as mcginnis said, part of the picture. >> alan, your book. let's talk about that for a moment. you argued the t.a.r.p. and the stimulus did their jobs. why and what did we learn from the crisis? >> well, why? we had a very sick financial system, especially a sick banking system. that had to be the first order of priority, even though it was bound to be incredibly unpopular politically, which was. and still is, by the way. the ask people about the t.a.r.p., now they twist their heads into awful shapes and say

why didn't the government ever do anything like that? there's a reason. if that ship went down, financial ship went down, all of us were going to go down with it. it will go down in history eventually as an incredibly successful government policy. as will the unknown piece of it which is the bank stress test that followed the following spring that sort of put the green light back on the financial system, the government said we've examined these, some of them have to raise capital, they raise the capital, it looks safe. >> you've gotten financial commandments going forward. >> yeah. >> i especially like thou shalt reremember that people forget. >> this is my personal favorite. >> and thou shalt we'll it simple, stupid. do you think they will? >> no. we are still remembering because the wound is type and peel are healing. as people get better they will bet carried away in yeuphoria. people will start inventing con connections that people barely

understand. >> including them? >> including them. some of them got caught in their own mouse traps. >> certainly. gentlemen, we appreciate your conversation. thank you for joining us today. up next we're "on the money" and with the billionaire determined to give it all away, microsoft founder bill gates on his mission to change the world and what he thinks of the company he started in today's technology in this trade. coming up. later, the business of broadway. how the big bets are the real showstoppers on the great white way and beyond. way and beyond. stay with us.

well, the world's second richest man bill gates has a mission to change the world one glar at a time. the billionaire philanthropist released his annual letter this week describing the work his foundation is doing to address challenges in global health and education across the globe. i spoke to the man who made microsoft at the world economic forum in davos last week. in the road aweighedhead for the company he founded and his success

successor, steve bammer. >> tech leaders, those are hard jobs. amazing things. be great. >> microsoft has not had an easy time recently. would you ever return to the front office? >> i'm engaged adds chairman on a part-time basis but my full-time work for the rest of my life will be the foundation work. microsoft has a lot of exciting things going on. it's a competitive field. windows 8 has done well. surface computers are doing well. so i share lots of ideas about where office should go and, you know, i think the field as a whole should be proud of how quickly it's moving and microsoft is lead in a lot of those areas. >> you and melinda have given away some $28 billion through your found dags. your fortune is still more than $68 billion. where do you see your work now? >> well, we're committed to the diseases that affect the

poorest, malaria, live, all that affect childhood conditions. until we treat the health of that poor child as being as important as health of a rich child, we'll still have work to do. and, you know, that gives us decade after decade of needing to make progress. malaria is a great story. the decaths have come down a lo. we don't yet have the tools to do eradication so we're funding drug companies and bed neck concepts that will -- when we get them, length chully give us enough to take whole countries and get malaria to zero and, you know, some day that will become a disease like smallpox, like polio will be soon that won't be killing anyone. >> what continued investment is needed at this point? in other words, who are the biggest stakeholders that you want to reach, that you haven't reached yet that haven't been as generous as they could? is this process harder as we see austerity taking place all around the world? >> well, the money that helps

out the poorest overwhelmingly comes from government aid budgets. so what kind of priority that gets, say, in the u.s. budget process over the next four or five years, i would say is pretty unclear. will the generosity go up, will it be cut proportionate willy or suffer a disproportionate cut. you know, unless we tell the aids story very well, i would be quite worried about less generosity. >> let me ask you a little about technology. a massive revolution continues. social media. what's your take on what's going on right now and what's most exciting to you? >> well, we're taking the internet revolution and we're applying it in more areas. so ex, for example, in education, the idea that not only are r. the best lecturing online but you can interact with other people and talk to other students. we ought to be able to deliver education that's high quality but dramatically low cost. a lot of our unemployment is because kids aren't well educated enough.

if you're a college graduate, unemployment is very low. and so we've got to increase access to education but letting the price go up won't allow that. >> what are you hoping for in terms of the gopments at microso microsoft? are there areas that you would like to see the company further into? >> well, we got windows and asset -- windows and office as two primary assets. in office, letting people prepare information and share it in the interactive way, there's a ton we can do. skype is the most popular communication service in the world but we can make it easier to find people you want to talk to, organize groups, get notified. so we're in so many area where's we're thinking about information workers and a deeper fashion than any of the other companies. you know, we've got our great software skills. so i would say the opportunity is great as ever. we've always loved the amazing competition in the field. and, you know, it's as exciting as it's ever been.

>> tell me about your own technology. final question here. it was reported that your daughters aren't allowed to choose apple products. what do you carry? what is always in your hand? >> windows pc for my reading. >> are they t not allowed to use apple products? >> they've never shown any interest. they love their windows phone, so -- >> so there you go. bill gates, thanks very much for joining us. up next, we're "on the money" and inside broadway with two veterans that have taken their show on the road all of the way to hollywood. the producers who know how to succeed on broadway, on television, and at the upcoming academy awards. ♪ oh aren't you broad to be in that

come on, kids, let's put on a show. my next guests are om of the most musical producers across film. best picture winner "chicago" as well as stage to screen musicals "hairspray" and "the mu sin man q. "and the 2013 academy awards program. craig is joining us right now. good to see you guys. thanks very much for joining us. >> our pleasure. >> glad to be here. >> good to see you. look, i'm a big fan of "smash." i want to say that right out of the gate here. you produced "smash" which

starts its second season on television this week. it's interesting that musicals have become so popular on television right now. >> i actually think that "glee" opened t ed thed the door for t happen. "glee" made the audience used to see people sing and dance in scripted form. "smash" took it a step further by having original music and also by having the backdrop of a broadway musical. and so it's very organic and it gives us license to play with the form. >> craig, "smash" is about the broadway industry. is there a chance that developing this show will launch a new business for you, an actual stage production of the show within the show? >> you know, when we first started working on the show, steven spielberg, who hired us and asked us to produce the show with him, because it was too steven's idea originally, one day in success, if we get to that place, maybe one day we'll take the show that we're writing

for "smash" and mount it on broadway. it was never a game plan, but we always thought in the back of our minds that could be like a fantasy. >> and you know, when we were shooting, we all stand around on the set watching these incredible musical numbers happen and we say, wouldn't this be great on stage. so we've certainly talked about it, but the actual reality, it hasn't happened just yet. >> you're right, though. yeah, what -- it's poised for such success. i agree with you. >> absolutely. absolutely. and in success, with doing that, it creates a new business for us. i mean, the idea of basically platforming an original show on tv and then having it adapted t to the broadway stage and then tours and then maybe making a feature film of that, i mean, it really, in success, it's limitless. >> look, you know, i've been working on this documentary on broadway and we've been hearing

that broadway's particularly an industry where you can make a killing but not make a living. >> that is the greatest quote because it's so true, because maybe less than 30% of the shows that are produced on broadway actually recoup. and that's not a very, very high percentage rate. >> we're very lucky we produce two broadway shows in the last couple of years, "promises promises" and had a succeed in business with daniel rat cliff and both shows made their money back. so we've had a great batting average so far which makes it easier to raise money for all of our future shows. >> let me ask you about your current project, and it's a huge one again. you're producing the oscars later this month, hosted by seth mcfarland this year. how tough of a job is this to get, number one, you got it.

craig, who are the stakeholders to please? you've got the network. you've got thei izadvertisers. you've t got the audience. talk to us about the oscars and putting this show together. >> well, you know, it really wasn't tough to get the job because we weren't anticipating it at all. we had talked about it for years and years and years, and we said it's been on our bucket list of things to do but there's not a campaign that you do. one day we were involved -- "smash" was shooting, craig was working on some other project and we got a call from the president of the motion picture academy and he said, would you guys like to do the oscars? >> but it's really exciting because it's like the biggest candy store you can imagine because you're dealing with literally every star in hollywood and every creative person in hollywood. and for the most part, everybody wants to be on the academy awards. >> and you've got barbra streisand performing, right? is live music going to be incorporated in the show dilute? >> yeah. >> very much so. >> we have adele who is going to

sing "sky fall," the first time she's ever sang the song live and may be the only time she ever since it live. and streisand hasn't done the academy awards in 36 years. >> all right. we will leave it there. guys, great to have you on the program. beth of luck with the oscars. we will be watching. >> thank you very much. >> thanks. hope you like it. >> i'm sure we will. it's good to see you both. up next, a look at the news this week that will have an impact "on the money." as we take a break, take a look at how the stock market ended the week.

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for more on our show and our guests, check out the website otn.cn brk c.com. and look for twitter and google plus. now the storys coming up in the week ahead that may move the markets and impact your money this week. earnings reports are out from disney, bp and technology companies yelp and linkedin, among others. monday, the president will submit piece budget for 2013 to congress. and on thursday the fall fashion week kicks off in new york city. on friday we'll find out if the u.s. is importing or exporting more goods with the ball loons of trade released. that will do it for today. my guests next week, paul krugman will be here. each week keep it right here

where we are "on the money." have a great week, everybody. i'll see you next weekend.

>> this is "the chris matthews show" -- >> ask not what your country can do for you. >> tear down this wall. chris: taking it to the street. barack obama is going to town on

-- and taking a page from ronald reagan's second term. and for a man called the great communicator it was historic tax reform. for obama, real steps toward gun safety. and the hegel hearing reminded some of the first debate. and finally, super bowl sunday. i've got some new rules. i'm -- i'm chris matthews. welcome to the show. with us today, howard fineman, the bbc's katrina, annie lowrey and michael duffy. first up, barack obama sees a path to history on guns and immigration at this point two weeks into his second term. this is when he's strongest and he's taking his case to the country over the heads of washington. in rean'